DMC: What about us? Journey to Growth

April 2, 2019

Each workday, some 45,000 to 50,000 people come from surrounding areas to work in Rochester.

It is a daily reminder of Mayo Clinic’s and Rochester’s economic importance. Both are critical to the region’s success. The Legislature’s passage of Destination Medical Center, a $5.6 billion economic development initiative, in 2013 only underscored its king-of-the-hill status.

But six years later, DMC-fueled growth has added urgency to a new question: What about the rest of Southeastern Minnesota? What about the area’s cities and towns? Are they to be mere bit players and adjuncts to Rochester and Mayo? Or does DMC’s potential for attracting people and talent create opportunities for surrounding communities?

“There was concern after DMC about a little too much focus on Rochester and what about the rest of Southeast Minnesota,” said Sen. Dave Senjem, a Rochester Republican who grew up in nearby Hayfield. “What can we do to keep those communities strong as opposed to just bedroom communities?”

Journey to Growth wasn’t created from DMC. Depending on who you talk to, some say J2G actually came before DMC. But whatever its origins, the regional economic initiative is now seen and sold as a complement to DMC.

“I use the example of the donut,” said Heather Holmes, J2G project manager. “The donut hole is DMC and the donut is Journey to Growth. We work together to make sure that we’re covering all the bases.”

$25M loan fund

As part of J2G, lawmakers from Southeast Minnesota are seeking to create a $25 million revolving loan fund to spur business and entrepreneurial activity in the region’s towns and cities.

A similar bill carried by state Rep. Greg Davids, R-Preston, was introduced in last year’s legislative session. It didn’t go far. This year, the bill is back with language nearly identical to last year’s version. With one big difference: It now is backed by an economic study that supporters say makes the case for investing millions in the region.

“I thought it made sense last year,” said John Wade, former J2G chairman. “After that really extensive study, it makes even more sense today. I feel it’s very important to invest in our regional economies.”

The study underscores both the region’s opportunities and the challenges:

• The region has a housing shortage that only grow more chronic, as DMC creates between 370,000 to 470,000 direct and indirect jobs in the region. To meet those housing needs, the current pace of housing supply will need to double.

• Without that production, by 2040, the region will forfeit $4 billion in economic output and $1.1 billion in earnings.

• Expanding childcare slots will be key to the region. By making it affordable and accessible throughout the region, employment options will increase, especially for women. Lower childcare costs will lead to $1 billion in economic output, the study says.

• As birth rates lower, the region will rely more on its immigration population to meet labor supply needs. Making sure there are services to support them will be key to keeping them in the region — and bring $350 million in enhanced economic activity.

Start-up and expansion

Under the bill, businesses and developers could tap the fund for up to 25 percent of a project’s cost and max out at $500,000. Cities and counties could also take out loans to help the bridge the costs of community and infrastructure projects. It would be used to spur start-up and business expansions in a 11-country region outside Rochester, in areas including agriculture and manufacturing, technology and childcare.

Holmes offered this example: Say you’re a city that wants to improve its bike trail system. Officials could seek a loan to help with the funding. The fund was created to be flexible, she said.

Sixty-five cities, townships and communities in Southeast Minnesota have endorsed the bill.

“When you’re looking at state and federal dollars, there’s a lot of requirements tied to those dollars,” she said. “There’s no money that you can use those types of fund for childcare or housing, whereas this one you can.”